Is Your Company Growing

1
Is Your Company Growing?

• Your company and the 2 x 2 Matrix.

Source Charan, R., Tichy, N. M. 1998. Every
Business Is a Growth Business. Random House, New
York.
2
Business Growth Needs

• Look From Outside In
• Segment Your Market
• Enlarge Your Pond

3
Look From the Outside IN

• Understanding Customers Needs Will Secure Your
  Future
• Continuous Reinvention
• Eliminates Blinders

4
Chryslers Minivan

• Baby Boomers Getting Older (With Growing
  Families)
• Lifestyle changes (Soccer Moms)
• Space Problems
• Vans Were Too Large (Commercial)
• Station Wagon Sales Were Falling
• Morphed Pickup, Station Wagon, Passenger Car
• The Minivan was Born!!!

5
Enlarging Your Pond

• Forces Outside Thinking
• Market Share, i.e.,10X Rule
• Any Related Marketplaces That Can Be Served

6
Taco Bell

• Mexican Fast-Food Business
• 80 Billion

• Quick-Service Restaurant Business
• 800 Billion
• Thousands Of New Points of Access

7
Taco Bells Growth
(in millions)
8
Segmenting The Market

• Break the Market Down Into Pieces
• Dont Have To Sell The Entire Market To Make A
  Profit
• Easy Way To Expand Your Pond
• Umbrella the Market And Specialize

9
Nike

• In 1984 Nike Had 1/3 Of The Athletic footwear
  Market
• REEBOK (womens footwear, stylish footwear)
• Nikes Market Share Fell By Half In Three Years

10
Nike Segments The Market

• 1/2 The U.S. Market
• Sales Growing At 39
• Profits at 41
• We are in the sports business, not the shoe
  business!

• Basketball
• Tennis
• Cross-training
• Aquatic Footwear
• Sports Apparel
• Accessories

11
Nike Re-Segments The Market

• Michael Jordan
• His Airness Air Jordan
• Charles Barkley
• Aggressive Style Force
• Scottie Pippen
• Quick, High-Flying Style Flight

• Basketball

12
Creating The Framework

• Customers -- Existing And New
• Needs -- Existing And New
• Existing Customers With Existing Needs
• New Customers With Existing Needs
• New Customers With New Needs
• Existing Customers With New Needs

13
The 2 x 2 Matrix
New
C
D
Needs
B
A
Existing
Existing
New
Customers
14
Quadrant A

• Existing Needs And Existing Customers
• Where Most Companies Operate
• Less Risky Than Other Quadrants
• Core Competence, Cost Cutting, Reengineering,
  redesign
• Price Wars, Zero-Sum game
• Companies Who Have Given Up On Growth Stay Here

15
Quadrant B

• New Customers And Existing Needs
• Geographic Expansion

16
Coca-Cola

• Mature Market
• Coca-Cola Has Been Global For Decades
• 50 Of World Market
• 70 Of Revenues From Abroad

17
Average Coke Consumption
8oz per capita per year
18
Quadrant C

• New Customers And New Needs
• High Risks
• High Profits
• New High Tech Players Will Be Here

19
Company's That Moved Into Quadrant C

• Motorola (Cellular phone business took a huge
  bet on an unproven need in a market it had never
  served)
• Hewlett-Packard (Instruments for Measuring moved
  on to printers, computers, fax, multipurpose
  machines, PDAs and more)
• Seagate Technology ---Conner Peripherals 3.5
  diskdrive

20
Quadrant D

• Existing Customers And New Needs
• Develop Ideas about Total Needs
• Define and meet new needs for customers
• Expand Into Customer Service

21
New Needs

• Polaroid Camera
• Sony Walkman
• Chrysler Minivan

22
GEs Dramatic Change

• 1/2 Worlds Market In Power
  Generation Equipment
• Acquired Nuovo Pignone
• Providing Services To Customers

23
The 2 x 2 Matrix for GE Power Systems in 1995
New
Large Power Generation Equipment
20 Billion
Needs
10 Billion
GE
Existing
Existing
New
Customers
24
Acquisition of Italys Nuovo Pignone Broadened
pond to 25-30 billionAlso 4 billion of
complementary business
5-10 Billion
New
C
D
20 Billion
Needs
B
A
Existing
Existing
New
Customers
25
Moved into Supplying ServicesMoved into
supplying equipmentEnlarged pond to 48 billion
5-10 Billion
18 billion
New
C
D
20 Billion
Needs
B
A
Existing
Existing
New
Customers
26
GE Power Systems 1998 pond is 700 billion37
times as big as the Market defined and served
three years previously
New
C
D
700 Billion
Needs
B
A
Existing
Existing
New
Customers
From the Wellhead to the Consumer